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Mixed Income Housing: Q & A

Inclusionary zoning is a concept that has worked in large cities, such as San Francisco and New York. Could it work in Syracuse? Three experts share explanations and perspectives about mixed income housing.

Imagine you’re a building developer. The city’s limit for a building size is five stories, but the government will allow you to build up to seven, as long as one of those stories goes to affordable units where tenants can pay a fraction of the market-rate rent costs. It means developers get more space – and more money – while the low and middle-income can live in a higher-income neighborhood.

The intention is to include lower incomes in a “better” neighborhood that offers the benefits that come with that. Another name for inclusionary zoning is mixed-income housing, which reflects the intent of the concept much better. For the residents who are getting into affordable units in an otherwise unaffordable neighborhood, inclusionary zoning is supposed to open doors. Better neighborhoods mean better schools, a fostering community and more job opportunities. It’s also supposed to save the government money. Traditionally, affordable housing has been created through government subsidies and tax breaks – direct financial gains that benefitted building developers. But through inclusionary zoning, governments are offering another benefit that developers love just as much as money – space.

Right now, inclusionary zoning is most successful in the high-market cities. Cities like New York, Boston and San Francisco have a high-priced market, high demand and a low supply of space that developers are scrapping for. It’s reasonable to argue that Syracuse is not a city like San Francisco, in more ways than just the weather. The cost of living in Syracuse is pegged at $18,630 a year, compared to San Francisco’s $30,146, according to a study by the Structural Biology Biochemistry Biophysics Program at Syracuse University. San Francisco is also the most expensive city for renters in the United States. The city of Syracuse also doesn’t provide the benefits that inclusionary zoning is supposed to offer. If you’re looking for higher economic and educational opportunities, you’ll have to leave and head to the suburbs — DeWitt, Camillus, Marcellus or elsewhere. Even if inclusionary zoning creates affordable housing for Syracuse, it can’t improve on the city’s 51 percent graduation rate, or its 30 percent poverty rate – no matter where you move with the city limits. Given that, it seems unlikely that inclusionary zoning would ever flourish. Here’s an explanation by the experts of inclusionary zoning’s benefits, the difference between on-site and off-site housing, its effects on segregation and their thoughts on implementation in Syracuse.

“The innovation around using density is appealing because you’re creating it out of thin air. You don’t need Section 8 and you could offer affordable housing in a neighborhood that otherwise may be out of reach for low- or moderate-income families. “In most of New York City, where affordability is a big issue, this is one way to address it. The other benefit is you’re creating mixed-income buildings, in an area that may be out of reach for low-income people … That area may have great schools or other amenities, (and) you’re now giving people a chance who ordinarily wouldn’t be able to afford something in that building, an opportunity to live there.”

(In off-site housing, the developers get more space for their higher-rent units, and agree to offer more units for low-income tenants than they would otherwise build, but these units are not mixed right in with the higher-income units.) “The basic question is what’s fair or what’s best if you’re getting this public benefit of increased zoning. Should the affordable housing units be integrated into a high-income neighborhood or can it be done more efficiently off-site and is that OK? It’s kind of a big question.”

“Rents in Manhattan command one price and rents in the outer boroughs another. And even within that, there’s great variation in neighborhoods. So how do you structure a program that’s flexible enough to work in different marketplaces? Can you get the cross-subsidization through enough additional density to cross-subsidize those units in every market? You really can’t.”

“[Local governments] want to see that you have an overall plan to create opportunities for low-income housing in many different types of neighborhoods. Ideally those that are not racially or economically concentrated, and places with access to good school districts, access to transit.”

“I think it can [create segregation] if it’s done really carelessly. But generally, a policy that offers some kind of off-site or adjacent development alternative seems to work really well. I think that the ‘poor door’ controversy grew because it’s such an egregiously bad design.” (See “Poor Door” section below)

“There are certain questions that need to be answered first. Is there a strong present or future demand for residential housing in the city itself? Is there a need in that low-, middle-income bracket? Are economics of land prices and sales prices and rents high enough, with some kind of cost mitigation features built into the policy, could it be feasible for developers to include a share of affordable units? A lot of places, more places than people think, the answer is yes.”

“The side that advocates for off-site inclusionary housing, their idea is, ‘OK, you’re building a building in midtown Manhattan, it’s a 100-unit building. 20 of those are going to be affordable. Maybe it’s more lucrative for the developer to build 30 units of affordable housing (off-site) in the Bronx, so he gets those 20 units (more) in Manhattan because the Manhattan units are so much more lucrative. That way it’s a win-win for everybody: The developer makes more money and you get 30 units of affordable housing instead of 20 units for housing. “As a result, the developers, if there’s an off-site option, they’re looking to always save money on the off-site option, so it’s always going to be cheaper for them to build, which is going to mean less amenities or a worse school district (for the lower-income tenants, who are supposed to be enjoying better amenities and better schools, the very idea of the policy). “Beyond a financing thing, it leads to a social question: Do you want to create segregated cities? Is it more valuable to have 20 units of low-income housing in a high-opportunity neighborhood or 30 units of low-income housing but in a much lower-opportunity neighborhood with worse schools and longer commute times?”

“Generally speaking, the cities with inclusionary zoning policies are the higher-market cities. San Francisco has an inclusionary zoning policy, Boston, Denver has one … cities where doing development isn’t as challenging as Syracuse or Buffalo or Cleveland, or places that are having issues of disinvestment and population decline. That’s because you’re able to leverage the rents people are willing to pay to the low-income housing. “The other thing is, you know in Syracuse or Buffalo or places like that, much of the market-rate housing is affordable housing there. You’re not charging $3,500 rent in Syracuse. The market is much softer, so the need for affordable housing is much less than in New York City.”

Subsidized housing is concentrated in the city of Syracuse

Subsidized housing units are those developed through the public housing program, while the Low Income Housing Tax Credit program or LIHTC provides tax credits for investors who invest in building affordable rental housing. These projects are geared toward low-income populations; LIHTC is more targeted to populations such as the elderly and the disabled.

CNY Fair Housing found that Syracuse has a significantly larger percentage of affordable housing units through these programs than in Onondaga County. Most of the HUD subsidized and LIHTC units are located in areas of low opportunity. However, there is a distinction between target and non-targeted LIHTC. Most of the targeted-LIHTC properties are spread more throughout the county because many suburban communities tend to not resist building affordable housing for seniors and disabled than for families. This leaves many families limited to find affordable housing in the city.

— CNY Fair Housing Report

Public transportation limits the ability of many residents to choose where they would like to live

Public transportation is a large factor in limiting housing options for people. If they depend on public transportation, they have to find a home where it is easily accessible.

Access to public transportation is limited in areas of high opportunity, where most people have cars instead. And where such access exists, it can be unreliable.

Recommendations to help alleviate the burden of public housing are to deliberately link the development of affordable housing to public transportation and place affordable housing in areas where cars are not required to access services; explore creating special Call-A-Bus service districts; and identify and eliminate gaps in bus services in neighborhoods of better opportunity.

— CNY Fair Housing Report

Home loans: Minorities denied more often

Countywide, minority applicants faced a denial rate for home purchase loans nearly double those who are white. Some 7 percent of white applicants were denied for their home purchase loans, whereas nearly 13 percent of minority loan applicants were denied in 2012. White individuals applied for home purchase loans at seven times the rate for minority groups: 4,211 white individuals applied for home purchase loans vs. only 607 minority individuals. Minority applicants generally were denied for loans due to their credit history and debt. White applicants generally were denied due to lack of collateral.

— CNY Fair Housing Report

Poor Door: NYC tenants forced to enter through separate door based on income

Related Articles about the “Poor Door”

The “Poor Door” controversy arose from a development built in New York City during the summer of 2014. Extell Development Company erected a building at 40 Riverside Blvd., a 33-story apartment high-rise in Manhattan near the Hudson River, according to the New York Times.

As part of its agreement to build, the company included space dedicated to affordable units, in a six-floor affordable segment right next to the Riverside Boulevard location. It’s technically what’s called an off-site affordable unit, but it’s right next to the high-rise — so close that they’re often viewed as the same building.

But the lower-income residents were directed through one door — around the block on 62nd Street — while the higher-rent, “luxury” residents got their own door facing the Hudson River.

It’s not the only such controversy where lower-income residents have said that they were never told about amenities made available to the higher-rent tenants they lived alongside, or that they just felt they were looked at “differently.”